Guatemala - Balance of payments



Guatemala generally finances its trade deficit through capital inflows. Capital flight caused by regional instability during the 1980s led to large deficits on the overall payments balance and brought foreign exchange reserves down from $709.6 million at the end of 1978 to $112.2 million at the end of 1982. In 1991 and 1992, with inflation lowered, private capital inflows were large enough to offset public capital outflows and the current account deficit. As a result, foreign reserves expanded during the 1990s, growing by $559 million. Foreign exchange reserves were over $1 billion from 1997 into 1999. Exports increased by 7.2% in 1997, and by 20.7% in 1998. National income reports do not include the export value added by the textile assembly industry (as they are generally located in the Free Trade Zones), and remittances from Guatemalans living abroad, which help finance the trade deficit.

Guatemala's underdeveloped infrastructure is a hindrance to foreign investment and economic development. A disproportionate share of investment goes to the Guatemala City area, despite rehabilitation of the railway system and investment in highways, telephone service, and electricity.

The US Central Intelligence Agency (CIA) reports that in 2001 the purchasing power parity of Guatemala's exports was $2.9 billion while imports totaled $4.9 billion resulting in a trade deficit of $2 billion.

The International Monetary Fund (IMF) reports that in 2001 Guatemala had exports of goods totaling $2.87 billion and imports totaling $5.14 billion. The services credit totaled $1.03 billion and debit $898 million. The following table summarizes Guatemala's balance of payments as reported by the IMF for 2001 in millions of US dollars.

Guatemala

Current Account -1,238
Balance on goods -2,278
Balance on services 133
Balance on income -90
Current transfers 997
Capital Account 93
Financial Account 1,521
Direct investment abroad
Direct investment in Guatemala 456
Portfolio investment assets -45
Portfolio investment liabilities 175
Other investment assets 157
Other investment liabilities 778
Net Errors and Omissions 98
Reserves and Related Items -474

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